Hospitality Hub | 2017-05-24
The Hospitality Crystal Ball

Hospitality has always been one of the most stylish industries. Au courant and forward thinking not only in its offerings but also in terms of sensibility and vision. Quick to adapt in a dynamic consumer-led environment, it leaves no leaf unturned or tech-tool unexplored to tract as well as retain business. Here is a look at some of the most “trending” trends in Hospitality.

 

MERGERS AND ACQUISITIONS ARE THE WAY TO GROWTH
Mergers and acquisitions has not only been the way of the hospitality world in the last few years but also seem to be the growth strategy of the future. The aquistion of Sarovar Hotels by Louvre hit the news earlier this year. AccorHotels  has always been strong on acquisitions and  the mega merger between Marriott International and Starwood that nobody has stopped talking about, seem to be cases in point.


 Three months after the acquisition by Louvre, Ajay K. Bakaya, Managing Director, Sarovar Hotels feels that mergers and acquistions are an excellent means of growth, “The industry’s shift from owning properties to managing hotels has created the need for greater global reach. Mergers and acquisitions is definitely one of the best vehicles for growth. Increasing the size is the best way to compete in an increasingly globalised hospitality sector. It gives benefits in creating a foothold in the highly competitive price negotiations with OTAs, competition with online start-ups and shifting traveller preferences. The easiest ways for a hotel group to access new customers and new markets is to take advantage of already established assets. A wide network of brands and hotels across different price points enables in reaching out to different customer segments.”


 Arne Sorenson, President and CEO at Marriott International in a March 2016 blog  post on merger with Starwood expresses a similar sentiment when he says, “Together, our enhanced loyalty programmes will increase access to consumers in the lifestyle segment, open opportunities for new partnerships, and have greater effectiveness versus digital competition. Our sales integration will result in our portfolio benefiting from exposure to Starwood’s brand-loyal, affluent consumers. Starwood’s portfolio will benefit from Marriott’s expertise in corporate, group and mid-market segments. This combination is also an opportunity to introduce key brands to underrepresented markets. Finally, our strong free cash flow will reinforce the value of our asset-light business model.” 
  When asked about the trend Jean-Michel Cassé, Chief Operating Officer, India South Asia, AccorHotels says, “Consolidation is a growing trend within the hotel industry however, this is not a new phenomenon as we have seen plenty of M&As in the past. That said, the trend has definitely picked up in the past year.


Increased competition, strong performances by OTAs and the emergence of sharing economy (resulting in higher fragmentation) are some of the factors that have given consolidation a push and cause companies to consider inorganic growth through acquisitions. The advantages of consolidation help achieve strategic leverage and economies of scale. On top of that, the effects of market dispersion, entry into new market segments through different brands and concepts, and simply gaining access to loyalty databases serve as a strong move for consolidation.”


 Speaking at Americas Lodging Investment Summit organised by USA Today, American based chain Red Lion Hotels’ CEO, Gregory T Mount brought another aspect of the phenomenon to light while commenting on the company’s acquistion of Vantage Hospitality. “Some of the smaller regional brands — those with 50 to 250 hotels — are starting to feel a little insecure and that they may not be relevant going forward. So they need to seek a little bit of a safe harbour. At least in our case, I know our guys (Vantage) were very worried about technology and where things were going and felt that if they didn’t sell that they would be become irrelevant going forward,” said Mount.  


Speaking at the same summit Elie Maalouf, CEO of The Americas at InterContinental Hotels Group (IHG), summed up the trend rather succulently. “Typically, when you see acquisitions in the hotel industry they are to achieve generally one of three things - more brands, more geography or more scale. Now, (mergers and acquisitions is) only one way to achieve those,” said Mount. 

 

INCREASING PREFERENCE FOR DIRECT BOOKINGS
Hotels are increasingly opting for direct bookings and encouraging visitors to book online rather than through third party platforms. Be it via best rate assurance, special offers or loyalty programmes; hotels are making their websites more lucrative as well as navigation friendly.


The primary reasons are clear – as hotels pay 15-25 per cent of top-line revenue in commissions, with the fees slated to increase even further, hotels are increasingly focusing on direct bookings, so that they can allocate the funds to product and service enhancement.


While the primary reason is compelling, there are a lot of implicit advantages of direct bookings.
A lot of hotel booking sites now do not share data with hotels, Booking.com being a case in point, this is a huge deterrent for hotels as they feel restricted in their abilities to communicate with and know their customers fully. Similarly the hotels’ capability to send welcome messages, extend special offers and establish a relationship with the client becomes restricted.


A lack of direct booking is also limiting when it comes to implementation of customer relationship management, loyalty programmes as well as preference tracking through a study of on-site customer behaviour and subsequently offering personalised services. 
Direct bookings shall  pave the way for mobile based apps and ease the entry of these apps into the limited storage space of consumer phones, having an already established an electronic relationship.


Last but not the least, there is an increased likelihood of a customer who proactively books directly on a hotel website to have a better connect with the hotel; an enhanced personality fit and a better attitude towards the hotel offerings. These customers are more likely to come back to a hotel rather than someone who picks it out of many on a website, possibly influenced by various secondary factors.


AccorHotels has a unique way of dealing with it, while the Hotel chain extensively uses OTAs to draw in initial traffic, it uses a retention program to ensure customers book directly on the AccorHotels site, the next time.
Commenting on the same Arif Patel, Vice President Sales, Marketing, Distribution & Loyalty AccorHotels says, ‘We always say that OTAs are great for customer acquisition. A potential guest in Shillong might never hear of Novotel Lucknow Gomti Nagar if OTAs did not exist. They are providing us with a first-time client, at a fraction of a cost than us creating a sales engine in Shillong. Basically, when the guest visits our hotel, we need to ensure that they feel welcome. We need to also identify him or her, and invite them, whenever they stay at an AccorHotels property, so next time, they don’t have to go back to an OTA. We call this the retention program.” 


He goes on to say that while a large chain like AccorHotels may have the liberty, an independent hotel owners choices are much restricted, “We are doing it in a very transparent manner, even vis-a-vis OTAs. As the majority of their customer volume are first timers with no common interests but share a common goal, my thoughts may vary from that of a small independent hotel owner and operator. But if I have a retention program, that means I want that customer to benefit from the other brands, and the other hotels (besides the one he stayed at), which is my strength. If you are an independent hotel, and you only own one hotel, you will be restricted with the offerings as you have to pay an OTA each time for return patron.”


The answer it seems is either to develop a better understanding with and elicit more detailed data analytics from OTAs or find more innovative ways to direct traffic to the hotel website. OTAs also need to be more sensitive to the needs of hotels, else risk losing an increasing chunk of business. 

 

BE A PART OF THE REVOLUTION WITH VIRTUAL REALITY 
Virtual reality transports you to an alternate reality which is a more immersive process than just looking at beautiful pictures.  The virtual reality industry is set to be a USD 150-billion industry by 2020 and can prove to be boon for the hospitality industry.  The hotels have woken up to the idea and have been experimenting with the technology and the results have been mind-blowing. Marriott hotels were the first one to show the way when it came to testing the waters with the dynamics of virtual reality. They went ahead and gave their guests a 360 degree enveloping experience of beaches of Hawaii and the sky line of London with their Travel Brilliantly campaign.


InterContinental Group of Hotels have been talking to a bunch of futurists and analysts and are interested to include virtual reality in their scheme of things when it comes to better customer satisfaction. In an exclusive with TravelScapes, James Britchford, Vice President of Sales & Marketing, India, Middle East & Africa told us about the latest trends they unravelled in augmented and virtual reality.

 

“There are three kinds of trends which we are noticing. One is planning which basically means connecting with friends and family while sitting three different rooms let’s say one sitting in San Francisco, one in London and one somewhere else and you can share experiences at the same time using virtual reality,” Britchford said. “The second trend is gaming where the guests can play intense games while sitting in the safety of their hotel room,” he said.  “And the third advancement which we were totally blown by is the department of 3D printing. It really stretched my imagination as we speak. 3D printing in the hotel can help you prepare a wardrobe for the guests before they arrive. We could know their sizes dress and shoes and fashion preferences,” Britchford added. 
Virtual reality is fast becoming a tool for sales and marketing for the hotels. The customers of today are constantly looking for newer experiences hence just pictures and text on a hotel’s website seems like a thing from the olden times. Virtual reality and augmented reality videos have revolutionised the way customer sees a particular property. For instance, Shangri-La Hotels and Resorts have been marketing its property along with a destination. They have smartly used the art of story-telling when they merged the values of their property with that the of the destination they are in like Ulaanbaatar in Mongolia, Lhasa in China, Hong Kong and Tokyo to name a few. 


The use of virtual reality by the hotels also gives their brand a younger image. Every hotel chain is trying to woo the millennials.

 

SOCIAL MEDIA EXPANSION TO WOO GENERATION Z
Today’s traveller likes to talk about what’s new, which is serenading to their senses. Whatever new they taste, see, feel goes on the social media and that’s a huge market which still needs to be tapped by the hoteliers and hospitality industry on the whole. Recommendations by friends and family and social media influencers have become a detrimental aspect while planning for a new trip. A teenager spends about 127 minutes on social media and almost 60 per cent is via a mobile device. The advancements which social media platforms like Snapchat, Instagram, Facebook, Twitter have made for instance live-streaming, stories, 360 degree photos/ videos have changed the way a destination or a property is consumed by traveller or a prospective consumer. 
 “Everyone has a phone or a tablet; everyone is a publisher; everyone is a media company, whether they have 500 Facebook followers, a million snapchat fans.

 

It’s an efficient and easy way to really publish what’s going on. Just because you’re sharing something, it doesn’t steal from the experience. It only whets the appetite for people to want more. It’s about what you’re wanting to convey to people that you really can’t convey in words or in a sentence and that’s where these mediums are so valuable,” says Andy Levey, Head of Marketing, La Perle by Dragone, one of the biggest live entertainment shows in Los Angeles. 

 

“More and more travellers than ever before are booking their trips based on peer recommendations and consumer behavior is now telling us reviews are becoming even more important than the traditional hotel star ratings,” says Jessica Chuang, Hotels.com Director, Regional Marketing Greater China, SEA and India.


Arif Patel, Vice President Sales, Marketing, Distribution & Loyalty Accor Hotels opined that customer needs and preferences have evolved at a fast pace and guests are increasingly shifting towards latest technology and social media platforms to discover destinations and hotels, plan and book their stay to share their experiences. “As digital space takes over, we need constant engagement to stay relevant with social media campaigns as well as offline promotions at individual hotel level,” says Patel. 
According to a study by Glion Institute of Higher Education— 90 per cent of consumers polled by Zendesk (US based customer service software company) claim that online reviews and critique influence their spending habits.  

 

Social media has enabled businesses to gather feedback and implement appropriate changes for even better customer service. Last year, social media has gone one step further with live video streaming that enables businesses to see how effective their marketing is in real time.Using the engagement rates from live video on social media, smart hospitality companies will prosper from the ability to alpha and beta test new products, lines and events.


Patel seemed to agree to the study. “Besides marketing and promotion, social media is also a great tool to monitor and respond to guest feedback.Today, a vast majority of guests check the reputation of hotels on social media platforms before making their bookings. While having a social media presence may seem sufficient, hospitality players need to be aware of guest comments online and work on delivering a good experience to every guest. Being a customer centric company, AccorHotels has partnered with Trust You (global leader in online reputation management) last year to create Voice of the guest (VOG) platform,” adds he. “VOG leverages technology to provide our hoteliers with a crystal-clear snapshot of the hotel’s reputation through online sources and internal guest satisfaction surveys,” says Patel.

 

PERFECT MARRIAGE OF HUMAN TOUCH AND TECHONOLOGY
Though technological advancements are changing hands as soon as the hoteliers are getting a whiff of them, they unanimously agree that the human touch in personalised services can never be out of vogue. As experiential tourism picks up speed, tourism industry is pumping more money in training the staff with best in technology. 


 “A very important part of our success is having that well educated, well rounded Emirati, who can converse in many languages, who is a good ambassador, who can tell you everything about the destination. The person sitting with you in that car or walking around with you is the person who makes or breaks your experience. That’s not technology, that’s simply investment in training,” says Saif Saeed Ghobash, Director General, Abu Dhabi Tourism & Culture Authority at the Arabian Travel Market 2017 in Dubai.


Also, to keep up with the latest trends in hospitality technology, the managers need to constantly upgrade themselves with better education and courses to build skill in this digital age. 


“Today’s traveller is coming to property after a thorough research. Our concierge works overtime to customise a plan to their exact needs and comforts. At the same time it is imperative for us to constantly innovate and come up with new experiences for our guests,” says Britchford.


Usage of data analytics to understand customer preferences by their feedback and transactional habits has become the latest fad when it comes to personalised services. Knowledge of data processes, technology and analysis drives major company decision these days. 


The data is used to put a shine to everything from your room’s bathroom to overall stay experience in the hotel. Infact, the experience starts even before you enter the hotels for example the moment you land on the airport and escorted through easy check outs and transport services.

 

HOTELS RIDING THE FARM-TO-TABLE WAVE
Some would argue that the farm-to-table catchphrase has already gone mainstream across the culinary scene, making it a new rule rather than a goal. In light of that, the farm-to-table food ethic that is fueling the growth of farmers’ markets across America proved the most dominant trend of 2013 and is gaining ground every day. 


Corinthia Hotel Budapest’s chef, Balázs Ölvedy, is obsessed with quality and claims that his hallmarks are the best ingredients, seasonality and sustainability. “It has taken thousands of miles to get to every corner of the country and find those free-range farms and small-producing suppliers that matched our new concept. Today our menu offers unsurpassable gastronomic experiences via the truly authentic flavours of our country. The formula is easy- fresh, seasonal, locally available ingredients, simple preparation, passion and expertise,” says Ölvedy.


Shreyas Retreat, Bengaluru India has taken the concept to another level. The ingredients are not only grown in its organic garden, but are chosen according to yogic principles of healthy eating. The menus are tailor-made for each guest after a consultation with the hotel’s naturopathic or ayurvedic doctors. 


In times of increased focus on sustainability and responsible business practices, brands like AccorHotels India are finding novel ways to contribute to the well-being of the environment and local communities alike. 


Ashwin Shirali, Vice President - Talent and Culture, AccorHotels India shares, “AccorHotels, which is present in 1,700 cities worldwide, has committed to developing urban farming and to planting 1,000 vegetable gardens by 2020. Over 500 vegetable gardens have already been planted worldwide, from Bangkok to Rome and Sao Paulo to Kinshasa.”


“Sofitel Mumbai BKC has planted its very own Kitchen and Herb Garden outside its eateries - Pondichery Café and Artisan, amidst Mumbai’s concrete jungle. Through the initiative, the hotel provides its guests with healthy and fresh produce, grown organically in house.”


“The Novotel Hyderabad Airport has a kitchen garden that produces a variety of vegetables, herbs and fruits that supply to the various hotel kitchens. All the produce generated is scientifically cultivated using natural farming techniques without artificial chemicals and pesticides. To create awareness on the environmental protection and sustainable agricultural practices, the hotel also encourages guests to try their hand at farming as well,” concludes Shirali.


The farm-to-table movement has emerged more or less parallel with changes in attitudes about food safety, freshness and seasonality. Traditionally as Indians we have always insisted on home cooked fresh meals. To keep up with the fast moving world, we recently slipped into adapting pre-cooked industrial food. However, it’s overwhelming to see the revival of that which is pure, fresh and free of chemicals finding its way even in ‘non-home’ food.  

 

TECHNOLOGICAL ADVANCEMENTS RAISING SERVICE LEVEL EXPECTATIONS
New-age traveller likes to be self-sufficient to save time and efforts. Travelling today is much easier than it used to be few decades ago. Now, it is all about instant gratification for the travellers. Millennials are a dominating segment that often looks for hotels that offer instant services and technology and provide enhanced in-room advancements. 


The guests now want faster check in/check out procedures to allow them more time for enjoyment and quick departures, in response to which hotels are now offering guests the opportunity to pre-register for their hotel stay, high speed wi-fi for excellent connectivity, amazing in-room technological facilities and personalised apps for easing out the accommodation experience.

 
The world’s most advanced hotels are getting seriously imaginative with their in-room technology. Integrated entertainment centers, tablet-controlled lighting systems, motion sensors that control heating levels—there’s a whole new wave of advanced features making their way into the world’s most modern hotel rooms. While chains like Starwood have implemented keyless entry via smartphone apps, Henn-na Hotel has gone one step further as it allows guests to access their rooms using facial recognition software. 


Nilesh Patel, Director of IT, AccorHotels, India explains how Accor is grasping the need of technology to provide the seamless stay experience to the guests. He says, “As the hospitality industry continues to climb the digital curve, in-room technology is becoming increasingly important as part of the guest experience. Overwhelming the guests with fancy, complicated new in-room tech services and controls may result in non-use of the hotel services. It is best to keep the technology simple and easy to use. Guests will value a hotel app that gives them the option of bypassing the front desk for trivial, time consuming hotel services such as placing a room service order, checking the weather or calling for laundry services.”


“My Web Valet app is a great example of how AccorHotels is leveraging technology to offer more personalised services to enable a seamless customer journey in helping guests plan and experience their trips better. The app is currently being rolled out at select properties around the world, including India at Pullman New Delhi Aerocity. Not only does the platform offer access to essential services such as housekeeping, in-room dining and real-time view of due bills, My Web Valet helps guests to find information on local attractions, flight details and many more.”  concludes Patel. 


According to a 2016 study conducted by Google in regards to how people use their phones for travel, 60 per cent of smart phone users stated they prefer using a mobile app versus a desktop to manage their loyalty program activities, and 41 per cent prefer using an app to book their hotel accommodations. Catering directly to this growing preference for on-the-go travel planning, the Preferred Hotels & Resorts recently launched the iPrefer mobile app which is designed to provide time-saving, value-rich functionality that will enhance the overall iPrefer experience – before, during, and after stay. 


Saurabh Rai, Executive Vice President of Preferred Hotels & Resorts says, “The noteworthy benefits of the iPrefer mobile app and member rate program shall further strengthen the rising popularity of the iPrefer program in India, as well as encourage discerning luxury travellers to conveniently book their holidays directly through iPrefer channels for access to competitive rates and valuable benefits upon every stay. Members can search and book stays at more than 600 iPrefer participating hotels worldwide, access exclusive offers such as member rates and the iPrefer Last-Minute Escapes, update their profiles, view  past/upcoming stay history and related points earnings, and immediately access and redeem Reward Certificates.”


As the hospitality industry continues to expand in the digital market, in-room technology will have a significant role to enhance the guest experience. From iPads to iPods, smart phones to netbooks, guests are always connected - on their terms. In order to capitalise on in-room technology, hotels must learn to adapt quickly to the ever evolving changes in this area, but also make the connectivity process easy for the guest. The importance of technology to hospitality will only augment in the future, and the hoteliers should embrace the change to remember that it can be a powerful tool to ensure guest satisfaction.





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